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Dangerous thinking when watching net worth
06-24-2014, 04:26 PM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2012
Posts: 11,701
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Dangerous thinking when watching net worth
Anyone else have this problem?
So, you monitor your net worth. Perhaps you use mint or quicken. You log on and see your "delta" for the day.
Well, over the last few years, it has been very good news most days (if you are in equities). If you are managing your own accounts for retirement (versus an annuity or pension), you may see some pretty impressive gains some days, maybe even over $10k.
This sometimes causes me to have dangerous thoughts. You know: "Ah, I can afford that toy, I just made $10k last night!"
No, no, no! Stop it! This is a very dangerous way to think, but I have to admit it slips in every now and then.
Anyone else experience this?
Now, the good (bad?) news is that there is a remedy. Today is a good day for a remedy. My NW just dropped over $10k today. Ouch! I have to remember the negative side too.
I'm not a gambler... But I think this is a glimpse into how gamblers go off the deep end.
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06-24-2014, 04:29 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Oct 2010
Posts: 2,464
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Remember, lots of dividend distributions going on this week.
__________________
For me experiences are not good or bad, just different
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06-24-2014, 04:37 PM
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#3
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Moderator
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 25,302
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I can see how that would happen (the dangerous thinking). I have a pension so not as applicable but there is more money available now than ever before in our lives.
The answer is have a plan, a budget, and stick to both. Slight deviations from time to time are not deal-killers but there is a reason one has the plan and the budget.
__________________
When I was a kid I wanted to be older. This is not what I expected.
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06-24-2014, 04:40 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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Quote:
Originally Posted by JoeWras
Anyone else experience this?
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No, all I have to do is recall the dark days of late 2008 and early 2009. Easy come, easy go.
__________________
Numbers is hard
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06-24-2014, 04:49 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Posts: 6,499
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It is nice to se the number go up.
I find it painful to spend unless it is via craigslist, ebay, goodwill or other cheap venue to get stuff I NEED at a few cents on the dollar.
__________________
There must be moderation in everything, including moderation.
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06-24-2014, 05:00 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Bay Area
Posts: 2,745
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Not an issue for me. Been watching stock for decades and have been through many up and downs. My splurging habit don't correlate with how the stock market did today, this week, or this month.
( Just to spite a "bear" day, I may log into Ebay to buy a toy. LwellBYM has its advantages. )
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06-24-2014, 05:21 PM
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#7
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Dryer sheet aficionado
Join Date: Jul 2013
Location: College Town
Posts: 44
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My solution to the problem is this; don't put them on quicken, or mint or anywhere else. Only open every third statement you receive. Or maybe only open the statements once a year. Honestly, I do the every three month open the statement plan, and I am pretty sure it saves me from all kinds of nutty behavior.
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06-24-2014, 05:29 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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I am allowed one new major toy per year that costs less than or equal to the largest one-day gain in my portfolio that year. Nothing dangerous about it.
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06-24-2014, 05:31 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
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The described wealth effect is great for the economy. Go buy that toy, it's makes you a good American.
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_______________________________________________
"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
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06-24-2014, 05:37 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Aug 2011
Posts: 3,594
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Quote:
Originally Posted by ERsoonihope
My solution to the problem is this; don't put them on quicken, or mint or anywhere else. Only open every third statement you receive. Or maybe only open the statements once a year. Honestly, I do the every three month open the statement plan, and I am pretty sure it saves me from all kinds of nutty behavior.
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+1
Before I was FIREd, I use to monitor often -- often to my emotional/financial distress.
Now that I am FIREd, and have essentially made it:
1) I switched my allocation to nice balanced funds (which will automatically balance for me during market swings)
2) I only look at the balance quarterly when I prepare a balance sheet for DW showing where everything is and what it is worth.
-gauss
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06-24-2014, 05:41 PM
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#11
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,586
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Quote:
Originally Posted by JoeWras
This sometimes causes me to have dangerous thoughts. You know: "Ah, I can afford that toy, I just made $10k last night!"
No, no, no! Stop it! This is a very dangerous way to think, but I have to admit it slips in every now and then.
Anyone else experience this?
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No. The closest I have come is, after a very good year, to take a little extra out of the portfolio to fund home improvements.
+1
It seems to go down more easily than it goes up...
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06-24-2014, 05:46 PM
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#12
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Recycles dryer sheets
Join Date: Sep 2012
Posts: 459
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used to happen to me but not any more. Those two crashes of 2000 and 2008 brought me back out of dream world. There were days when my NW had gone down by 90K in a day.
I still have the headline from 9/29/2008 saved in my gmail archive:
>>>>>>>>
Stocks crushed
Approximately $1.2 trillion in market value is gone after the House rejects the $700 billion bank bailout plan.
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Retired at age 52 on 12/1/2016
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06-24-2014, 05:47 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 4,203
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While my FI is largely due t Pensions and SS, we do have savings that among other things support LTC. However, we live now much like we lived getting here. We save for things we want. I don't look at what our IRA and long term saving are doing. I take out according to my withdrawal rate, and we spend or save some or all of it. So in essence we have a 'mad money' savings account. It is not dependent on what the market s doing.
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If it is after 5:00 when I post I reserve the right to disavow anything I posted.
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06-24-2014, 05:57 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2011
Posts: 8,368
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Quote:
Originally Posted by ls99
It is nice to se the number go up.
I find it painful to spend unless it is via craigslist, ebay, goodwill or other cheap venue to get stuff I NEED at a few cents on the dollar.
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+1 (Were we separated at birth?)
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"Exit, pursued by a bear."
The Winter's Tale, William Shakespeare
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06-24-2014, 06:07 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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+1
Quote:
Originally Posted by robnplunder
Not an issue for me. Been watching stock for decades and have been through many up and downs.
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I have a diary logging the daily close of the Dow, S&P, Nasdaq, and my stash. It went back to Dec 13, 1999, when I decided to keep a permanent record.
Quote:
Originally Posted by MichaelB
It seems to go down more easily than it goes up...
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Actually, there are more up days than down days.
However, when it goes down, it goes down a lot more than it does going up.
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"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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06-24-2014, 06:28 PM
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#16
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Moderator Emeritus
Join Date: May 2007
Posts: 12,894
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According to my records, there is no strong correlation between up markets and spending for us. But there is definitely a correlation between down markets and spending.
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06-24-2014, 06:40 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2012
Posts: 11,701
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OK, cool. So far, it has just been "thinking". I haven't acted yet.
This 5 years of recovery is going to my head a little. For sure, I remember 08, 09 (heck, even 87), but memory has faded a bit lately.
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06-24-2014, 06:47 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by JoeWras
... For sure, I remember 08, 09 (heck, even 87), but memory has faded a bit lately.
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While I have longer memory than most, I am hoping that the population at large will forget, so they will keep on spending. That helps my stocks. Just today at market open, they said that home sales were up, as was consumer sentiment. Then, the market turned around because of some international bad news.
Will see what happens tomorrow.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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06-24-2014, 06:56 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,688
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I have a budget for "luxuries" - $X per month - and if I want something, I have to "save" for it from this budget. In theory it doesn't matter how well or how badly the investments are doing but in practice it does - when the markets are down, I tend not to spend it.
__________________
Budgeting is a skill practised by people who are bad at politics.
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06-24-2014, 07:07 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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Quote:
Originally Posted by JoeWras
...
This sometimes causes me to have dangerous thoughts. You know: "Ah, I can afford that toy, I just made $10k last night!"
No, no, no! Stop it! This is a very dangerous way to think, but I have to admit it slips in every now and then....
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Maybe you should give in. If the market drops 50%, wouldn't it feel good to know that you have the thing you wanted, but you would have had to sell 2x the stocks to buy it after the drop? Or that it was an X% hit to portfolio then, but it would be twice the hit now?
I thought about that in the 2000 crash - I said 'heck, a nice car does not depreciate as fast as my stocks just did!'
-ERD50
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